Hi! I came across a post in another forum where a young person is concerned because they collected a substantial amount of money to donate to someone. While they used GoFundMe, they also received funds through Venmo and Cash App.
Like many Americans, I’ve received over $600 this year for non-taxable reasons (e.g., I booked a hotel, and my partner reimbursed me). Additionally, I’ve been sending my college student her rent money every month, which she then pays to her landlord.
These are common, everyday transactions, and I’m not worried because I know they’re not taxable. However, I’m curious about how the IRS handles these situations.
Despite searching online, I only found articles explaining that money from roommates for bills isn’t taxable, but nothing on how the IRS reconciles the reports they receive with what actually happened.
Can someone explain how this process is meant to work? Thank you!
Venmo and similar apps usually don’t report personal transactions to the IRS, like reimbursing someone or sending money to family. They only report if you’re receiving over $600 for goods or services. So for everyday stuff, you’re generally in the clear, but keeping a record of your transactions is always a good idea.
Venmo is required to report transactions to the IRS if you receive more than $600 in a calendar year for goods or services. Personal transactions between friends or family aren’t reported, but always keep accurate records.
My working assumption is that if a third party is involved in collecting money, you will either receive some sort of 1099 for sufficiently large payments, or they will be subject to subpoena if necessary to determine your income level.
Venmo must report your payment activity to the IRS if you earn enough money on the platform. Check the IRS website for the exact amount that triggers reporting.